Europe remains troubled by considerable economic uncertainty. Even though current economic data indicate difficulties for some time ahead, the European economy is likely to see moderate growth, though, with exports starting to increase in the second half of the year. It is not realistic, however, to expect the European economy as a whole to grow at a pace sufficient to prevent higher unemployment rates or reduce idle capacity, and interest rates are likely to remain low in Europe and thus in our home markets.
In 2013, we will continue to focus on executing our New Standards strategy.
The outlook for 2013 as outlined below is based on the adjusted financial highlights for 2012 shown on page .
We are continuing our efforts to increase income. The announced initiatives, some of which have already been implemented, are expected to raise net interest and net fee income in 2013, but lower key interest rates and lower lending volumes, especially at Personal Banking, will reduce the effect. Overall, net interest income is likely to remain at the 2012 level (DKK 22.8 billion), whereas net fee income is expected to increase from 2012 (DKK 8.9 billion).
Net trading income is expected to remain at a generally satisfactory level, though below the level in 2012 (DKK 10.6 billion).
Other income is expected to be in line with 2012 (DKK 1.3 billion).
Net income from insurance business is expected to be lower than in 2012 (DKK 2.2 billion), partly because DKK 0.4 billion from the shadow account was booked to income in 2012.
Danske Bank will invest in customer offerings, but on-going cost-saving initiatives will keep total costs at the same level as in 2012 (DKK 24.6 billion).
The trend in credit quality will generally depend on economic conditions in our markets, including developments in house prices. Core impairments are expected to fall slightly below 2012 (DKK 7.7 billion), while Non-core impairments are expected to be significantly lower than the year-earlier level (DKK 4.9 billion).
Total impairments for customers in Ireland for 2013 and 2014 are expected to be around DKK 2.5 billion.
Danske Bank’s tax rate for 2013 is expected to be somewhat above the Danish corporate tax rate of 25%.
We maintain our overall guidance for 2013 given in Annual Report 2012, that is, a net profit in the range of DKK 7.5-10 billion. However, the year got off to a slow start in the first quarter with low interest rates and low lending activity.
This profit guidance is subject to uncertainty and depends in particular on normalised trading and insurance business income and on economic conditions not becoming worse than expected.
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